What is the main source of law authorising this entity form?

The OBCA or CBCA, as applicable.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

A corporation is a legal entity.

(Maximum) period of existence

A corporation has an unlimited duration provided it is not cancelled or wound up.

Governing document(s)

A corporation is created by the filing of articles of incorporation with Ministry of Government and Consumer Services in the case of OBCA corporation, and with Corporations Canada in the case of a CBCA corporation.

Liability of incorporators / shareholders

The corporation’s shareholders are shielded from liability except in limited circumstances.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

A corporation can have international shareholders and can hold international assets.

Can this type of entity be publicly listed or held?

Yes, a corporation’s shares can be traded as securities, subject to compliance with applicable securities law.

Can this type of entity be used for a non-profit or charitable organization?

Non-profit organizations (but not charities) may use this structure, but it is more customary for them to be incorporated under either the Corporations Act of Ontario as a corporation without share capital, or the Canada Not-For-Profit Corporations Act.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The corporation is created upon the filing of its articles of incorporation and the issuance of a certificate of incorporation.

Involvement of notary, company register, governmental authorities

A new corporation may either receive a sequential numbered name (e.g., 1234567 Ontario Inc.) or request a specific name. If a specific name is requested the filer must provide public name search results showing that the requested name is not already in use.

Main costs, including registration and similar fees (excluding legal fees)

A fee of $360 Canadian for an OBCA corporation and $100 Canadian for online incorporation of a CBCA corporation is payable for filing articles of incorporation. Incorporation can be completed immediately online.

Minimum number of incorporators / shareholders and residency requirements

A corporation must have an initial incorporator and at least one shareholder. There is no residency requirement with respect to shareholders.

Minimum number of directors (or other applicable officers) and residency requirements

A corporation must have at least 1 director. In the case of a CBCA corporation at least 25 per cent of the directors of a corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian. Effective July 5th, 2021 an OBCA corporation is not required to have any resident Canadian directors.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

Shares must be issued for some consideration, but there is no minimum requirement.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

The corporation will be issued a Business Identification Number (BIN) upon formation by the Canada Revenue Agency.

What is the title of the applicable company registry?

Ministry of Government and Consumer Services in the case of OBCA corporation, and Corporations Canada in the case of a CBCA corporation.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following information is required for the articles of incorporation:

• Name of the corporation;
• Address of the registered office of the corporation;
• Number of directors (either a fixed number or a minimum and maximum);
• Name and address for service of the first directors;
• Restrictions on the business the corporation may carry on, if any;
• Classes and maximum number of shares the corporation is authorized to issue;
• Rights, privileges, restrictions, and conditions attached to each class of shares;
• Eestrictions on issue, transfer, or ownership of shares;
• Name and address for service of the incorporators; and
• Signature or electronic approval of the incorporators.

The articles can be reviewed by the public.

The corporation must make periodic filings if there are changes in its directors or officers. These filings are publicly available.

For OBCA corporations, the corporation must file a Schedule 546, Corporations Information Act Annual Return for Ontario Corporations, together with their annual tax return setting out its directors, officers and registered office.

For a CBCA corporation, the corporation to send notice to Corporations Canada within 15 days of any change involving a director of the corporation.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The corporation is governed by its Board of Directors.

How are the members of the executive body appointed, dismissed and replaced?

Directors are elected and may be removed by the shareholders.

Is it possible to appoint corporate directors or must all directors be natural persons?

No. Directors must be natural persons.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

The corporation can have non-executive directors. A two-tier board structure is not applicable.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The shareholders elect the directors who oversee the management of the corporation. Certain matters require the approval of the shareholders including the appointment of accountants and the approval of a change in the name of the corporation, making changes in its authorized capital, disposing of all or substantially all of the assets of the corporation, and amalgamating (merging) with another corporation which is not a subsidiary, holding body corporate or a “sister” corporation.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Unless the bylaws of the corporation otherwise provide, a quorum at a meeting of shareholders is holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy. Except for certain specific matters, decisions are made by a majority of shareholders.

A shareholders’ agreement or the articles of incorporation may require a greater number of votes of directors or shareholders than that required by the OBCA or CBCA.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

There are different requirements for public companies (termed ‘offering corporations’ by the OBCA) and private companies. For example, a private company’s board of directors must have at least one individual, whereas a public company’s board must have no fewer than three individuals. There are also a number of procedural differences between public and private companies with respect to calling and holding meetings of shareholders.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The corporation must appoint an auditor and prepare audited financial statements unless, each financial year, all the shareholders consent in writing to exempt it from this requirement. This does not apply to public companies, where no audit exemption is available.

Is the entity permitted to determine its own financial year?

Yes. Its first taxation year must end not later than 53 weeks from the date of incorporation.

Is the entity subject to any statutory (external) auditor obligations?

See above.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Directors may appoint officers but are not required to do so.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, shares may be subdivided into different classes (e.g., preferred shares, common shares) and series.

What documentation is required for the transfer of ownership interests?

No filing is required. The corporation must maintain a register of shareholders and record the transfer in its minute book.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

No.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

Shares must be issued for consideration. Shares are issued to such persons as the directors determine.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Consideration for shares can be either money, property, or past service equivalent to the value the corporation would have received if the share had been issued for money. Shares cannot be issued until the consideration for the share is fully paid. Shares cannot be issued in consideration of future services.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The corporation may redeem or repurchase any shares issued by it. Upon such purchase or redemption the shares shall be cancelled or if the articles limit the number of authorized shares of the applicable class, restored to the status of authorized but unissued shares.

A corporation may reduce its stated capital provided that it does not impair the corporation’s ability to pay its liabilities as they become due or result in the realizable value of the corporation’s assets being less than the aggregate of its liabilities.

Any requirements with respect to distributions to shareholders?

Distributions may be made by payment of dividends of money or property, provided that it does not impair the corporation’s ability to pay its liabilities as they become due or result in the realizable value of the corporation’s assets being less than the aggregate of its liabilities.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, the shareholders may enter a shareholders’ agreement to provide, among other matters, how the shareholders shall exercise their voting rights or to restrict the powers of the directors to manage or supervise the management of the business of the corporation.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Corporations must file an annual return to stay in good standing. A corporation which fails to file annual returns may be dissolved.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The general rate of tax at the federal level is 38%. This is reduced to 28% by the federal abatement which allows room for provincial taxes. Federal taxes are further reduced by a "general tax reduction" of 13% on most income other than investment income. The combined federal and provincial rate on active business income is generally around 26%. In addition to income taxes, the federal government of Canada imposes Goods and Services Tax (GST) of 5% and the government of Ontario imposes sales tax of 8% on most goods and services that are supplied for use in Canada. There is a full input tax credit available for GST and if the tax is harmonized (that is both the federal and provincial sales taxes are combined into a single tax called HST) paid by the corporation in providing these goods and services.

Summary of any specific matters, e.g. recent or prospective major legal developments

In December 2020 Ontario passed legislation removing the requirement that at least 25% of directors are resident Canadians. This legislation came into force date on July 5th, 2021.